It is hard to justify giving airlines a tax break while food banks remain in Scotland

Written by Mandy Rhodes on 16 November 2015 in Editor's note

On tax credits, Kezia Dugdale has succeeded in putting Nicola Sturgeon on the defensive

Gordon Brown doesn’t do subtle. So when he gave a thinly veiled warning to Jeremy Corbyn last week during his speech about the threat to tax credits – that basically you can’t deliver on principles without first delivering on power – his meaning was clear. For as long as Corbyn is perceived as unelectable, the poor of Britain will suffer the consequences.

And that puts both the leader of Scottish Labour and of the SNP Government in an invidious position. Can they use the increased powers of devolution to overcome the consequences of a Tory government while being largely on the same page in respect of the threat to welfare and while also trying to overpower each other?

The result so far, is a confused but sadly inevitable bidding war, both in terms of cash and ideology. And Labour’s new leader in Scotland, Kezia Dugdale, kickstarted that process over tax credits and in so doing gave her party a rare upper hand.

Having told this magazine that she would use monies raised by reversing the SNP’s intended policy of scrapping Air Passenger Duty (APD) to pour into education, she then U-turned on that pronouncement and announced a week later at her Scottish conference, perhaps emboldened by the House of Lords’ rejection of the Tory tax credit plan, that she would actually use that money – approximately £250m – to reverse the damage wreaked on Scottish families by the slashing of tax credits. This, she said, was the kind of redistribution that defines Labour [i.e. and not the SNP].

It was an emotive linking of two diametrically opposed tax-related policies; one that helps a multi-million-pound airline industry and another that helps the Scottish poor. And in one strategically placed swipe, Dugdale exposed both the callousness of the Tories and the cracks in the SNP’s left-wing credentials.

It left the SNP floundering on its position about whether it could or couldn’t reverse the impact of the Tories’ plans before eventually ceding that amendments to the Scotland Bill would allow that to happen. The party of government was seen to stumble and, while it was accused of a volte face, Dugdale’s flip-flop was seen as well-played politics.

In reality, the SNP Government cannot reverse George Osborne’s cuts but it does get to apply the sticking plaster using new top-up powers to offset the expected losses to hard-pressed working families. Where it finds that money is still to be decided.

Dugdale, meanwhile, has cleverly walked a political tightrope, framing a Scottish policy around the opposition to tax credit cuts, which would only succeed in mitigating the consequences of Osborne’s reforms, while her party at Westminster voted against full devolution of welfare which could have succeeded in ridding Scotland of the Tory cuts once and for all. She may still have to fully explain how that stance works in practice.

The important thing here is that politically, Scottish Labour is onto something and it is not letting go.

Its economics may yet unravel and its tax credit plan is undoubtedly shot through with flaws, not least about the timing of when the APD proposal could come into play, on the complexity of how top-ups might work, on whether clawbacks would be triggered and how it would all be administered. However, it has neatly exposed an SNP Government who says it is one thing and then acts like another.

While everyone has been arguing over tax credits, the issue of using APD as a mechanism to ameliorate against welfare cuts has thrown a belated spotlight on the SNP’s policy to remove APD.

Later this month world leaders will gather in Paris for the UN Climate Change talks while at the same time the SNP Government continues to peddle a policy about removing APD.

It makes no sense from a climate change point of view and in terms of the link now made by Dugdale between it and compensating families hit by tax credit cuts, it makes no sense from a social justice point of view.

According to the very latest opinion poll, which puts the SNP 34 points ahead of Labour for next year’s election, Dugdale hasn’t got a snowball’s chance in hell of implementing her plans, so she can afford to lob a few well-placed policy grenades at the SNP. And on tax credits, she is forcing Nicola Sturgeon to go on the defensive.

The SNP is already protecting hard-pressed Scots against the ravages of the welfare system but can it afford to continue compensating for Westminster’s cuts whilst also promising to remove APD – one of the few tax levers it will have at its disposal – from the funding pot?

Gordon Brown’s tax credit system has many flaws, not least the way it has helped institutionalise low pay. But he is right on one thing – principles without power remain just warm words.

Sturgeon has the power, she says she has the principles, and now she has a golden opportunity to think again on APD – a policy from another era and from another leader.

Politics is about choices. Give a hugely profitable and lobbyist-heavy industry a £250m bung and contribute further to climate change, or help pull Scottish families out of poverty? It’s not rocket science.

Of course, when times are good, the economic choices can be different. But while there is even just one Scottish food bank remaining, giving a multi-million pound, publically funded hand-out to the likes of Ryanair, which has just announced a 32 per cent hike in half-year profits, for the sake of ill-defined benefits just doesn’t seem to fit with what we loosely call ‘Scottish values’.